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COOPERATIVE BANK IN GERMANY UNLEASHES INNOVATION WITH NCR’S FLAGSHIP INNOVATION EXPERIENCE ROOM

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A virtual roller coaster ride is not only fun, but builds the digital literacy of employees.

Volks banke G Schwarzwald Baar Hegau is the first bank to introduce an experiential room in which customers and employees can discover and experience new technologies

A virtual roller coaster ride is not only fun, but builds the digital literacy of employees.

A virtual roller coaster ride is not only fun, but builds the digital literacy of employees.

NCR Corporation(NYSE: NCR), the global leader in omni-channel solutions, has developed a completely new concept called the NCR Innovation Experience Room, an experiential “playground” that gives financial institutions the opportunity to build digital literacy among employees and customers, enabling them to seize current megatrends in ways that are mutually beneficial to the business and their customers. Volks banke G Schwarzwald Baar Hegau, one of the largest cooperative banks in Germany, is the first to introduce the new break through concept. This mobile experiential room enables the bank’s customers and employees to shape its digital transformation with the aim to combine digital technologies and human interaction in a way that creates real added value for customers.

The NCR Innovation Experience Room give access to technologies that most people so far have only seen in the media, such as this 3D printer.

The NCR Innovation Experience Room give access to technologies that most people so far have only seen in the media, such as this 3D printer.

The NCR Innovation Experience Room is a flexible and versatile room that is equipped with a variety of state-of-the art technologies. These range from virtual reality headsets, 3D printers, drones, and robots, to examples of big data or Internet of Things applications and nanotechnologies. The featured technologies are exchanged after a while to keep up the attraction. The ‘Voba Playroom’ of the Volksbanke G is designed as a mobile room that will tour the different branches of the bank in the coming months. Furthermore, it will be set up at events and trade shows to demonstrate how a regional bank creatively plays out digitalization. NCR developed the conceptual design of the innovation experience room, supplied technology and provided its expertise to the Volksbanke G. Furthermore, NCR supports the introduction phase of the VobA playroom as think-tank and coach to drive the usage of the experience.

Google cardboard glasses are a new way of presenting real estate properties.

Google cardboard glasses are a new way of presenting real estate properties.

“Our view of the world is changing dramatically under the influence of megatrends such as globalization, connectivity and communitization,” said Thomas Bader, head of business development at Volksbanke G. “our new Playroom provides a new motivation for our customers to come into our branches and try out newest technologies that most of us only know from media reports. But what’s more, we effectively demonstrate to our customers and employees that we are thinking about future developments and are breaking new, creative grounds involving all parties.”

The mobile Voba Playroom was brought into operation at the end of April and features the following bases: A NCR SelfServ 85 kiosk as an interactive assistant, a 3D printer, a multi-copter drone, Amazon Echo personal assistant, as well as virtual reality glasses with which customers can not only take a virtual roller coaster ride, but also view real estate properties in 3D. Employees and customers of Volksbanke G are already familiar with the NCR kiosks, as the bank uses them to advertise properties on the large touchscreens, allowing customers to navigate properties and corresponding mortgages with just a few swipes. As interactive assistant and selfie creator the kiosks are now generating new experiences. As the war for talents heats up, employers in rural areas have to look for new ways to stand out and provide long term strategy and vision. With the NCR Innovation Experience Room Volksbanke G demonstrates a whole new dimension in consulting and employee engagement.

The digital mirror with interactive functions helps to establish a closer relationship between customers and bank clerks.

The digital mirror with interactive functions helps to establish a closer relationship between customers and bank clerks.

In order to master the change in the financial industry, banks need the environment and a culture that allows and supports change,” explained Harald Heinz, Channel Area Leader in Germany, Austria and Switzerland at NCR Financial Services. “With our innovative playground the Volksbanke G has taken another step in that direction. Enabling a creative, hands-on approach to complex topics unleashes the creativity in everyday work. Banks and their customers both benefit from employees who enjoy their work and are motivated to shape and drive the future.”

Banking

Dovish BOJ policymaker calls for new strategy to beat price stagnation

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Dovish BOJ policymaker calls for new strategy to beat price stagnation 1

By Leika Kihara

TOKYO (Reuters) – The Bank of Japan must lay out a new strategy for hitting its elusive 2% inflation target at this month’s policy review, board member Goushi Kataoka said, warning the drag to growth from the COVID-19 pandemic could prolong price stagnation.

Kataoka said the pandemic’s hit to demand will likely delay Japan’s economic recovery and weigh on inflation expectations, which have been falling since the end of 2019.

“If we see a repeated rise in infections, that would negatively affect both the output gap and inflation expectations. This, in turn, will prolong price stagnation,” Kataoka said in a speech to an online meeting with business leaders on Wednesday.

The BOJ plans to conduct a review of its policy tools in March to make them more sustainable and flexible to weather what had become a prolonged battle to reflate growth and achieve its price goal. Governor Haruhiko Kuroda has stressed the review will not lead to an overhaul of its stimulus programme.

“The BOJ must examine and explain its policy strategy going forward, taking into account how the path toward achieving its price target has become unclear,” Kataoka said of the policy tools review.

Kataoka, seen as the most dovish policymaker in the BOJ’s nine-member board, has lobbied unsuccessfully for cutting interest rates and strengthening the BOJ’s commitment to take stronger steps to fire up inflation.

He repeated his calls for the BOJ to more strongly commit to keeping rates low for a prolonged period.

“It’s hard now to foresee inflation powerfully heading towards our 2% target,” Kataoka said.

(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Lincoln Feast.)

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Banking

UK banks face savings glut on road to pandemic recovery

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UK banks face savings glut on road to pandemic recovery 2

By Iain Withers and Lawrence White

LONDON (Reuters) – Britain’s big four banks amassed more than 200 billion pounds ($277.52 billion) of new deposits last year as customers reined in spending through pandemic lockdowns, far outstripping extra lending to struggling businesses and households.

Full-year earnings reported by HSBC, Barclays, Lloyds and NatWest last month revealed the extent to which lenders’ finances have been upended by the crisis.

The banks now face a glut in savings, a Reuters analysis of the banks’ results show, as domestic customers of the four lenders deposited 221 billion pounds of extra cash.

By contrast, despite banks doling out billions of pounds of state-guaranteed finance to companies since the pandemic hit, their net lending growth in the UK overall was 53.4 billion pounds – a quarter of the growth in deposits.

The more limited lending growth can be explained by a fall in appetite for some lending, particularly consumer credit, where separate Bank of England data has shown Britons paid back 13.8 billion pounds in the last year.

More deposits help shore up bank finances, but are not necessarily good news for lenders when central bank interest rates are near zero, making it hard to lend profitably.

That explains the heavy focus on wealth management in banks’ strategy updates last month, as they race to earn more from fees to compensate for low lending margins.

Banks have said they expect a customer spending splurge as Britain comes out of its latest lockdown in the coming months, which may go some way to eating into the deposits pile.

Graphic: UK deposits grew much faster than lending in 2020 UK banks face savings glut on road to pandemic recovery 3

The bulk of UK bank profits are made on the difference between the interest gained on lending and paid out on deposits.

The crunch in consumer credit therefore severely dented lender income, compounded by the fact the Bank of England cut benchmark rates to an all-time low of 0.1%.

This double whammy can be seen in sharp drops in income at the two domestically-focused banks – NatWest and Lloyds – where income fell 24% and 16% respectively last year.

The fall was a more modest 10% at HSBC, which benefited from a more international footprint and exposure to markets in Asia that proved more resilient over the year.

Barclays bucked the trend entirely, with income overall edging up 1% thanks to a stellar year for its investment bank in pandemic-driven volatile markets that offset woes in retail.

Graphic: Bank income crunched, Barclays lifted by trading arm

UK banks face savings glut on road to pandemic recovery 4

The big unknown for the banks remains how severe a hit the crisis will deal to their loan books, once government stimulus packages to support consumers and businesses are phased out.

The four banks have set aside nearly 19 billion pounds worth of provisions between them for loans expected to go bad due to the crisis.

These provisions were largely front-loaded in 2020, with the bulk taken in the first half of the year – as lenders are required to book ahead of time under forward-looking accounting rules known as IFRS9.

Despite the torrid economic backdrop, the provisions in the last two quarters were back to pre-crisis levels at at least some of the banks – a reflection of the impact of ongoing government stimulus.

Britain’s Finance Minister Rishi Sunak is expected to extend support again on Wednesday when he lays out his annual budget plan that is expected to pile more borrowing on top of almost 300 billion pounds of COVID-19 spending and tax cuts.

Banks know there is a great deal of delayed pain to come and it is unclear whether their provisioning to date is sufficient.

Graphic: Bad loan provisions were frontloaded in 2020

UK banks face savings glut on road to pandemic recovery 5

Solving this conundrum will be key to jump-starting British banks’ share prices, which have languished in recent years over fears about Brexit and near-constant restructuring that has crimped profits.

Optimism over vaccine rollouts has seen the lenders’ shares climb back towards pre-pandemic levels since the autumn, but that still leaves them near 12-year lows.

Graphic: Bank shares since pandemic hit UK

(Reporting by Iain Withers and Lawrence White; Editing by Susan Fenton)

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Banking

Data: the much-needed procurement adrenaline shot, helping banks remain competitive in the race for innovation

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Data: the much-needed procurement adrenaline shot, helping banks remain competitive in the race for innovation 6

By Toby Munyard, Vice President, Efficio Consulting

Like a flip-switch, the pandemic saw many industries pushed over the innovation tipping point, accelerating digital transformation efforts at a pace never seen before. After all, consumer behaviour has changed dramatically – a lack of face-to-face contact with businesses has meant that organisations are having to turn to digital methods in order to keep customers engaged. Meanwhile, the sudden shift to remote working has put immense pressure on organisations to digitise internal processes.

For the world of banking, the need to continuously drive innovation has been a key pressure point for many years. And now, that pressure is building. Challenger banks, such as Monzo, Revolut and Starling, continue to cause huge waves within the financial services industry, due to their digital-first approaches. These, often start-up brands, have the advantage of operating nearly solely online, with none of the legacy systems in place to hold them back from innovation. However, even these brands haven’t been immune to the vast impacts of COVID. Consumers are getting increasingly tech-savvy, and operating on a digital-first model is no longer enough in its entirety. In today’s increasingly competitive environment, banks must modernise their entire technology functions to support both the front and back ends of their businesses.

That said, in such a competitive environment with rising cost pressures, innovation of this kind can feel out of reach for banks. After all, banks are often a low-growth environment, and optimising the cost of operations can typically take at least five years or more. Another key sticking point for banks when pursuing innovation is the added complexity and costs surrounding regulation. Unfortunately, regulation is part and parcel for any financial service. And new innovations and product offerings will only increase the need for compliance.

So, with myriad challenges facing the industry, how can banks compete in the race to innovation?

Optimising costs

To be able to invest in a digital-first future, the journey begins with the procurement function. Whilst it is impossible to have complete control over revenue, one thing a business can control is cost.

Toby Munyard

Toby Munyard

Effectively optimising operational and business costs will be key to freeing up valuable liquidity to fund new digital initiatives. But this requires a proactive approach to supplier management. Rather than relying on supplier rebates once a deal is done, the CPO (Chief Procurement Officer) must effectively influence and ensure efficiency from the beginning of a relationship to achieve significant savings.

For existing suppliers, a step change may be required in order to steer this initiative. Getting the right supplier onboard and having forward-looking conversations about new trends in the market will be pivotal. After all, these suppliers will be key to driving digital plans forward. Suppliers providing products and services where demand is declining should not be neglected. Chances are that because of the trends in the market, they are keen to maintain and gain as much business as possible, meaning preferable deals may be available.

In addition to effective supplier management, a review of internal systems is urgently needed to aid cost-reduction on a long-term basis. Traditional banks are often made up of a range of complex legacy systems that allow for very little flexibility in a new digital age. The key here will be to simplify these systems, whilst integrating solutions such as robotics, AI, and SaaS to ensure they are running as efficiently as possible.

Data – procurement’s secret weapon

To be successful on any cost-reduction mission, however, the CPO must be aided by accurate, up-to-date, intelligent data. Without it, the long-term, sustained change needed to outmanoeuvre new market entrants, simply cannot be achieved.

After all, the intelligence derived from good, high-quality data provides the CPO with much-needed visibility in which informed decisions over cost-reduction can be made. It is only with this visibility that organisations can identify opportunities and deliver efficiencies that lead to sustained cost savings.

Architecture that can effectively connect to anything, anywhere, will be an essential tool to ensure the CPO is presented with all the relevant data – for example, linking enterprise databases, data warehouses, applications, legacy systems, and Cloud services to comparable systems at partners and suppliers. Integrating with apps, wearables, and mobile devices at an individual user level, and using an enterprise mobility strategy to link to employees and contractors and third party ‘big data’ sources, will also help to provide a complete view.

Harnessing the power of data

Whilst a necessary tool for procurement, being faced with a mountain of data can be overwhelming and actually hinder performance if it is not captured and interpreted correctly. Typically, within financial services, there is a huge amount of data being captured within Enterprise Resource Planning (ERP) and other finance-based systems that is not being analysed. As a result, efficiencies are missed, and the organisation remains stagnant in the digitalisation journey. To truly harness the power of data, the procurement team must ensure it has access to the right skills and have the right talent in place. This may require additional training, or consultancy to leverage data effectively and to execute successfully in today’s agile and fast-paced environment.

Ultimately, to remain competitive, banks must put the power back into the hands of procurement. By providing the CPO with the right tools and responsibility, the procurement function can align to the strategic targets set out across the business.

Good data, when teamed with effective procurement capability, will be a much-needed adrenaline shot for finance companies. Whilst challenger brands may only be running a 400-metre sprint in terms of digitalisation, in comparison, traditional banks are running a marathon. Stamina and the need for long-term efficiencies will be pivotal to win in a race of innovation.  A

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